ANNOUNCEMENT 29 Jun 2010

In June 2010, the government of Spain announced a change in private-sector financial support.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE



letter from the EC to Spain, Brussels 20.12.2012
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_35488


Inception date: 29 Jun 2010 | Removal date: open ended
Still in force

Capital injection and equity stakes (including bailouts)

On 29 June 2010, Banco Mare Nostrum (BMN) was established as the result of a merger of four saving banks, namely: Caja Murcia, Caja Penedčs, Caja Granada and Sa Nostra. BMNs market share at a national level is around 3.6% in deposits and 2.9% in loans. (par. 13, letter from the EC to Spain, Brussels 20.12.2012). The bank focuses on retail banking, mainly to SMEs and individuals.
 
In the context of the merger, the Spanish government program FROB ('Fondo de Reestructuración Ordenada Bancaria') agreed to subscribe EUR 915 million of convertible preference shares under the FROB recapitalisation scheme. (par. 2)
 
On 18 February 2011, Spain adopted more stringent regulatory capital requirements. As a result, BMN required addition EUR 637 million to meet the new solvency ratio (over its risk weighted assets).
 
On 12 December 2012, Spain notified the EC about its intention to provide additional capital of EUR 730 million (through FROB). Furthermore, Spain seeks to sell impaired assets to a bad bank, called AMC. The assets transferred amount to EUR 2.1 billion. (par. 21)
 
The EC finds that: 'the intervening authority providing the measures is directly financed through State resources and its decisions are directly imputable to the State. ... The Commission therefore considers that the new recapitalisation measures (recapitalisation and asset transfer) are financed through State resources. ' (par. 76)
 
The EC concludes that: 'the measures potentially distort competition as they allow BMN to obtain the capital necessary to avoid technical insolvency (in the adverse case), and thereby prevent its exit from the market.' Furthermore, the measures: 'are likely to affect trade between Member States because BMN continues to compete on the Spanish retail market, the mortgage lending markets and the commercial lending markets.' (par. 86 & 87)
 
The EC also names potential affected countries by stating that: 'In all those markets, some of BMN's competitors are subsidiaries and branches of foreign banks. (par. 87)
 
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory

AFFECTED SECTORS

 

AFFECTED PRODUCTS

 
N/A